Costing - Study Mode

[#171] Net realizable value is added into separate costs to calculate
Correct Answer

(C) final sales

Explanation

Solution: Net realizable value is added into separate costs to calculate final sales. Net realizable value (NRV) is the value for which an asset can be sold, minus the estimated costs of selling or discarding the asset. The NRV is commonly used in the estimation of the value of ending inventory.

[#172] Gross margin percentage in constant gross-margin percentage NRV method is based on
Correct Answer

(B) total production

Explanation

Solution: Gross margin percentage in constant gross-margin percentage NRV method is based on total production.

[#173] Third step in constant gross margin percentage NRV Method to allocate joint cost is to compute
Correct Answer

(C) allocated joint costs

Explanation

Solution: Third step in constant gross margin percentage NRV Method to allocate joint cost is to compute allocated joint costs.

[#174] An expected future cost which diverges in unconventional course of action is known as
Correct Answer

(D) relevant cost

Explanation

Solution: An expected future cost which diverges in unconventional course of action is known as relevant cost. Relevant cost is a managerial accounting term that describes avoidable costs that are incurred when making business decisions. The concept of relevant cost is used to eliminate unnecessary data that could complicate the decision-making process.

[#175] If net realizable value is $20000 and separable costs are $18000, then final sales will be
Correct Answer

(D) $38,000

Explanation

Solution: If net realizable value is $20000 and separable costs are $18000, then final sales will be $38,000. Final Sales = Net Realizable value + Separable costs = $20000 + $18000 = $38000.